Sovereign investment fund
Encyclopedia
A sovereign investment fund is an investment fund created or controlled by a government, usually of a country with trade surpluses and abundant foreign monetary reserves.
Those funds might buy foreign assets, and among them company's stocks, which creates some political controversies in the "recipient" countries. They could be considered as an evolution of ordinary Sovereign wealth fund
s, which invest state budget surpluses in national assets and, in the case of foreign holdings, liquid assets and treasury securities.
Resources for sovereign funds are commonly obtained by profits from exports of commodities, but can also be gotten though other means, such as investing in international capital markets. The United Arab Emirates, Kuwait, Norway, and Russia all have funds devoted to investing in oil and natural gas exports. Other countries with investment funds are as varied as China, Singapore, Chile, and the Pacific island nation of Kiribati.
There has been some concern recently about sovereign investment funds becoming the "new hedge funds" with a lack of transparency and hence an increase in risk to the financial system.
Those funds might buy foreign assets, and among them company's stocks, which creates some political controversies in the "recipient" countries. They could be considered as an evolution of ordinary Sovereign wealth fund
Sovereign wealth fund
A sovereign wealth fund is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial...
s, which invest state budget surpluses in national assets and, in the case of foreign holdings, liquid assets and treasury securities.
Resources for sovereign funds are commonly obtained by profits from exports of commodities, but can also be gotten though other means, such as investing in international capital markets. The United Arab Emirates, Kuwait, Norway, and Russia all have funds devoted to investing in oil and natural gas exports. Other countries with investment funds are as varied as China, Singapore, Chile, and the Pacific island nation of Kiribati.
There has been some concern recently about sovereign investment funds becoming the "new hedge funds" with a lack of transparency and hence an increase in risk to the financial system.